The Government wants to improve the way pension information is sent to the public
Thursday 07 Nov 2019 Author: Daniel Coatsworth

Once a year anyone saving into a defined contribution pension plan receives an annual statement to show how much they’ve got and what their pot might be worth at retirement.

The purpose is to keep people informed so they can work out if they might have adequate money in retirement to live the life they want.

The document has good intentions but, in typical financial industry fashion, many annual statements are too long and overly-complex, meaning the important messages may not be getting through.

The Government is now holding a consultation on simplifying these statements so they are free of jargon and are written in an easy-to-understand manner.


The documents should still have the same messages: how much is currently in the pension pot and how much could you have when you retire?

However – and this is very important – the Government also wants the statements to address a third question: what can you do to have more money in retirement?

It wants to encourage people to think more about retirement planning. That is likely to require pension providers being better at marketing and offering guidance on managing money and setting aside cash to go into your retirement pot.

That’s all very well, but what about getting people to open the annual statements in the first place? For example, investment platform Hargreaves Lansdown says 85% of its pension customers log into their account every year but most don’t open their annual statements.


In Sweden, state pension statements are sent in orange envelopes to distinguish them from other types of government mail. Sweden also conducts a national advertising campaign to raise public awareness of the orange envelope.

A SIFO survey found that 82% of orange envelope recipients classified as ‘general pension savers’ in Sweden opened the correspondence in 2014.

In the UK, the Government says Sweden’s efforts prove how people can be encouraged to engage with pensions by generating a national conversation about retirement saving. It would come as no surprise if it copied the idea to improve pension communication in the UK.


It is important to give the public the right information on how to plan financially for retirement. There are lots of ideas but not enough action. For example, we’re still waiting for the introduction of Pension Dashboards which could become an important retirement planning tool as they should let you see all your different pensions in one place, thereby giving you a more rounded view of your retirement savings.

This month sees ‘wake-up’ packs from pension providers start to be sent to 50-year-olds; previously they were only sent to people on the verge of retirement. The packs aim to make people think about whether they are saving enough and whether they understand the different ways to use a pension.

One could argue that elements of this pack should be sent to people a lot earlier in life as time in the market and years of saving are very important to building up a decent sized pension pot.

The Government is right to be looking closely at ways to improve pension communication. All we need now is progress and not endless consultation as anything to improve pension engagement has to be positive in the long-term.

‹ Previous2019-11-07Next ›